Owens Corning This February, OC unveiled robust results for the final quarter of 2023, exceeding the Zacks Consensus Estimate for both earnings and net sales, setting the stage for investors. However, despite these successes, the announcement triggered a significant 2.7% plunge in Owens Corning’s shares on February 14th.
Chair and chief executive officer of OC, Brian Chambers, expressed optimism, stating, “Looking ahead, we will continue to focus on delivering outstanding results in the near-term as we execute the strategic moves announced last week which will further strengthen our leadership in building and construction materials and position the company for long-term success.”
Owens Corning updated the long-term EBIT margin expectation for its Roofing segment to a mid-20% on average, marking an encouraging shift from approximately 20%.
Highlights of Performance Metrics
The company achieved adjusted earnings per share (EPS) of $3.21, which outperformed the consensus mark of $2.82 by 13.8% and scaled up by 29% from the prior year’s $2.49.
Owens Corning Inc Price, Consensus and EPS Surprise
Owens Corning Inc price-consensus-eps-surprise-chart | Owens Corning Inc Quote
Net sales of $2.3 billion triumphed over the consensus mark of $2.24 billion by 3%, marking a 1% increase year over year from $2.29 billion.
Breakdown of Business Segments
The Composites segment experienced a 13% year-over-year drop in net sales to $514 million, attributed to decreased volumes and price declines stemming from low spot prices in glass reinforcements. Earnings before interest and taxes (EBIT) margin shrunk to 5% from 11% in the prior year, while the EBITDA margins also declined from 18% reported a year ago to 13%.
The Insulation segment witnessed $931 million in net sales, a 3% year-over-year decrease due to lower volumes in both the North American residential insulation and technical and global insulation businesses. The Roofing segment recorded a 16% year-over-year increase in net sales to $928 million, driven by strong demand.
Operating and Financial Highlights
Adjusted EBIT and adjusted EBITDA improved 18% and 13%, respectively, on a year-over-year basis. Adjusted EBIT and adjusted EBITDA margins expanded 200 basis points each from the prior year.
2023 and Balance Sheet Overview
In 2023, adjusted EPS totaled $14.42, a 12% increase from 2022, while net sales decreased by 1% to $9.68 billion. Owens Corning also reported an increase of 2% in both adjusted EBIT and adjusted EBITDA. As of December 31, 2023, the company had cash and cash equivalents of $1.62 billion, reflecting an improvement from the prior year.
Owens Corning released $812 million to shareholders through dividends and share repurchases in 2023, underlining the company’s commitment to rewarding its investors.
Strategic Outlook and Projections
The company expects net sales slightly below the first quarter of 2023 for the first quarter of 2024, while aiming to achieve mid-teens margins. Looking further ahead to 2024, Owens Corning anticipates general corporate expenses between $240 million and $250 million and interest expenses in the range of $70 million to $80 million.
Capital additions, depreciation, and amortization are estimated at approximately $550 million, with an effective tax rate projected to be between 24% and 26% on adjusted earnings.
Market Analytics and Comparable Performances
Owens Corning currently holds a Zacks Rank #3 (Hold). Other companies in the construction domain such as Watsco, Inc. (WSO) and Masco Corporation (MAS) have shown divergent performances, serving as markers for peers in the industry.
